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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Guaranty Federal Bancshares, Inc.    GFED

GUARANTY FEDERAL BANCSHARES, INC. (GFED)
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GUARANTY FEDERAL BANCSHARES : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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11/09/2018 | 08:44pm CET

General




The primary function of the Company is to monitor and oversee its investment in
the Bank. The Company engages in few other activities, and the Company has no
significant assets other than its investment in the Bank. As a result, the
results of operations of the Company are derived primarily from operations of
the Bank. The Bank's results of operations are primarily dependent on net
interest margin, which is the difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
The Bank's income is also affected by the level of its noninterest expenses,
such as employee salaries and benefits, occupancy expenses and other expenses.
The following discussion reviews material changes in the Company's financial
condition as of September 30, 2018, and the results of operations for the three
and nine months ended September 30, 2018 and 2017.



These forward-looking statements involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations, estimates and
intentions of Guaranty Federal Bancshares, Inc. ("Guaranty Federal Bancshares")
and its wholly-owned subsidiary, Guaranty Bank (the "Bank", with Guaranty
Federal Bancshares and the Bank being referred to collectively hereinafter as
the "Company") that are subject to change based on various important factors
(some of which are beyond the Company's control).  The following factors, among
others, could cause the Company's financial performance to differ materially
from the plans, objectives, expectations, estimates and intentions expressed in
such forward-looking statements: the strength of the United States economy in
general and the strength of the real estate values and the local economies in
which the Company conducts operations; risks associated with the Company's
acquisition of Hometown Bancshares, Inc. ("Hometown") and its wholly-owned
subsidiary Hometown Bank, National Association ("Hometown Bank") and the
integration of Hometown Bank with the Bank, including the possibility that we
may not realize the anticipated benefits of the acquisition? the impact of
recent and potential future changes in the laws, rules, regulations,
interpretations and policies relating to financial institutions, accounting,
tax, monetary and fiscal matters and their application by our regulators; the
effects of, and changes in, trade, monetary and fiscal policies and laws,
changes in interest rates; the timely development of and acceptance of new
products and services of the Company and the perceived overall value of these
products and services by users, including the features, pricing and quality
compared to competitors' products and services; the impact of changes in
financial services' laws and regulations (including laws concerning taxes,
banking, securities and insurance); asset quality deterioration; environmental
liability associated with real estate collateral; technological changes and
cybersecurity risks; acquisitions; employee retention; the success of the
Company at managing the risks resulting from these factors; and other factors
set forth in reports and other documents filed by the Company with the
Securities and Exchange Commission from time to time.  For further information
about these and other risks, uncertainties and factors, please review the
disclosure included in Item 1A. "Risk Factors" of the Company's Annual Report on
Form 10-K for its fiscal year ended December 31, 2017.



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The Company cautions that the listed factors are not exclusive. The Company does
not undertake to update any forward-looking statement, whether written or oral,
that may be made from time to time by or on behalf of the Company.



On April 2, 2018, pursuant to the previously announced Agreement and Plan of
Merger dated as of November 30, 2017 (the "Merger Agreement") by and between
Guaranty Federal Bancshares and Hometown, Hometown merged with and into Guaranty
Federal Bancshares with Guaranty Federal Bancshares being the surviving
corporation (the "Merger"). Subject to the terms and conditions of the Merger
Agreement, at the effective time of the Merger, each share of Hometown common
stock was converted into the right to receive $20.00 in cash. In the aggregate,
the Company paid $4.6 million in respect of the outstanding shares of Hometown
common stock. Hometown's subsidiary bank, Hometown Bank, was merged into
Guaranty Bank on June 8, 2018.



In connection with the Merger, pursuant to a Second Supplemental Indenture,
dated as of April 2, 2018, by and among the Company, Hometown, and Wilmington
Trust Company, as trustee (the "Trustee"), the Company assumed Hometown's
rights, duties, and obligations under the Indenture, dated as of October 29,
2002, as supplemented by that certain First Supplemental Indenture, dated as of
May 19, 2014, by and between Hometown and the Trustee, under which Hometown
issued approximately $6.1 million aggregate principal amount of its Floating
Rate Junior Subordinated Debt Securities due 2032.



Financial Condition



The Company's total assets increased $171,921,227 (22%) from $794,459,520 as of
December 31, 2017, to $966,380,747 as of September 30, 2018. The increase is
primarily due to the Hometown assets acquired of $178,785,000.



Available-for-sale securities increased $4,126,470 (5%) from $81,478,673 as of
December 31, 2017, to $85,605,143 as of September 30, 2018. The increase was
attributable primarily to $7,521,000 in securities acquired in the Hometown
acquisition. The Company also had purchases of $25,151,079 offset by sales and
principal payments of $25,804,714 and an increase in unrealized losses of
$2,317,521 when compared December 31, 2017.



Net loans receivable increased by $150,711,310 (24%) from $629,605,009 as of
December 31, 2017 to $780,316,319 as of September 30, 2018. The increase was
attributable in large part to the Hometown acquisition, which added loans
totaling $143,919,000 at fair value. The Company continues to focus its lending
efforts in the commercial, owner occupied real estate and small business lending
categories.



Allowance for loan losses increased $624,289 (9%) from $7,107,418 as of December
31, 2017 to $7,731,707 as of September 30, 2018. In addition to the provision
for loan losses of $925,000 recorded by the Company for the nine months ended
September 30, 2018, charge-offs of specific loans (classified as nonperforming
at December 31, 2017) exceeded loan recoveries by $300,711. The allowance for
loan losses, as a percentage of gross loans outstanding (excluding mortgage
loans held for sale), as of September 30, 2018 and December 31, 2017 was 0.98%
and 1.12%, respectively. The allowance for loan losses including the discount
and premiums on acquired loans, as a percentage of gross loans outstanding
(excluding mortgage loans held for sale), as of September 30, 2018 was 1.36%.
The allowance for loan losses, as a percentage of nonperforming loans
outstanding, as of September 30, 2018 and December 31, 2017 was 55.3% and 71.3%,
respectively. Management believes the allowance for loan losses is at a level to
be sufficient in providing for potential loan losses in the Bank's existing loan
portfolio.



38

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Goodwill increased $2,615,532 (100%) and core deposit intangible increased
$3,205,714 (100%) as of September 30, 2018 when compared to December 31, 2017.
The increases are due to the Hometown acquisition and are further discussed in
Note 7 to the Condensed Consolidated Financial Statements.



Premises and equipment increased $11,551,001 (109%) from $10,607,094 as of December 31, 2017 to $22,158,095 as of September 30, 2018. This is increase is primarily due to the $10,066,000 of fixed assets acquired from the Hometown acquisition.




Deposits increased $153,364,972 (25%) from $607,364,350 as of December 31, 2017,
to $760,729,322 as of September 30, 2018. The deposit growth was attributable in
large part to the Hometown acquisition, which added deposits of $161,248,424 at
fair value. For the nine months ended September 30, 2018, checking and savings
accounts increased by $69,132,414 and certificates of deposit decreased by
$76,871,838. See also the discussion under Item 3 - "Quantitative and
Qualitative Disclosure about Market Risk - Asset/Liability Management."



Federal Home Loan Bank advances increased $2,400,000 (3%) from $94,300,000 as of
December 31, 2017 to $96,700,000 as of September 30, 2018. The Company acquired
$2,000,000 in Federal Home Loan Bank advances due to the Hometown acquisition
but the increase was offset by net principal reductions.



Note payable to bank increased $5,000,000 (100%) when compared to December 31,
2017. The Company opened a $5,000,000 revolving line of credit with a variable
interest rate tied to Libor which matures on June 28, 2020. The funds were used
to provide additional capital for funding Bank asset growth.



Subordinated debentures increased $6,317,794 (41%) from $15,465,000 as of
December 31, 2017 to $21,782,794 as of September 30, 2018. The increase is due
to the Hometown acquisition, which added $6,362,000 of subordinated debentures
at fair value.



Stockholders' equity (including net unrealized loss on available-for-sale
securities and interest rate swaps) increased $3,723,194 (5%) from $74,891,493
as of December 31, 2017, to $78,614,687 as of September 30, 2018. The Company's
net income during this period exceeded dividends paid or declared by $3,345,753.
On a per common share basis, tangible book value decreased from $17.10 as of
December 31, 2017 to $16.48 as of September 30, 2018 due to the Hometown
acquisition.



Average Balances, Interest and Average Yields




The Company's profitability is primarily dependent upon net interest income,
which represents the difference between interest and fees earned on loans and
debt and equity securities, and the cost of deposits and borrowings. Net
interest income is dependent on the difference between the average balances and
rates earned on interest-earning assets and the average balances and rates paid
on interest-bearing liabilities. Non-interest income, non-interest expense, and
income taxes also impact net income.



39

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The following table sets forth certain information relating to the Company's
average consolidated statements of financial condition and reflects the average
yield on assets and average cost of liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense annualized by the
average balance of assets or liabilities, respectively, for the periods shown.
Average balances were derived from average daily balances. The average balance
of loans includes loans on which the Company has discontinued accruing interest.
The yields and costs include fees which are considered adjustments to yields.
All dollar amounts are in thousands.



                               Three months ended 9/30/2018                     Three months ended 9/30/2017
                          Average                         Yield /         Average                          Yield /
                          Balance          Interest         Cost          Balance           Interest         Cost
ASSETS
Interest-earning:
Loans                   $    787,638$   12,774           6.43 %   $    618,652$    7,052           4.52 %
Investment securities         87,182             524           2.38 %         84,577              432           2.03 %
Other assets                  18,257              80           1.74 %         10,418               41           1.56 %
Total
interest-earning             893,077          13,378           5.94 %        713,647            7,525           4.18 %
Noninterest-earning           59,509                                          40,386
                        $    952,586$    754,033
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing:
Savings accounts        $     42,412              29           0.27 %   $     30,026               15           0.20 %
Transaction accounts         405,230           1,175           1.15 %        348,925              524           0.60 %
Certificates of
deposit                      208,534             622           1.18 %        133,198              354           1.05 %
FHLB advances                 88,750             482           2.15 %         89,246              420           1.87 %
Other borrowed funds           5,000              59           4.68 %              -                -           0.00 %
Subordinated
debentures                    21,797             282           5.13 %         15,465              160           4.10 %
Total
interest-bearing             771,723           2,649           1.36 %        616,860            1,473           0.95 %
Noninterest-bearing          103,817                                          62,599
Total liabilities            875,540                                         679,459
Stockholders' equity          77,046                                          74,574
                        $    952,586$    754,033
Net earning balance     $    121,354$     96,787
Earning yield less
costing rate                                                   4.58 %                                           3.24 %
Net interest income,
and net yield spread
on interest earning
assets                                    $   10,729           4.77 %                      $    6,052           3.36 %
Ratio of
interest-earning
assets to
interest-bearing
liabilities                                      116 %                                            116 %




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                               Nine months ended 9/30/2018                    Nine months ended 9/30/2017
                          Average                        Yield /        Average B                       Yield /
                          Balance         Interest         Cost          alance          Interest         Cost
ASSETS
Interest-earning:
Loans                   $   759,354$   29,971           5.28 %   $   598,925$   20,043           4.47 %
Investment securities        86,457           1,466           2.27 %        88,783           1,361           2.05 %
Other assets                 19,358             276           1.91 %        12,623             134           1.42 %
Total
interest-earning            865,169          31,713           4.90 %       700,331          21,538           4.11 %
Noninterest-earning          58,903                                         40,512
                        $   924,072$   740,843
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing:
Savings accounts        $    40,325              76           0.25 %   $    29,360              43           0.20 %
Transaction accounts        407,895           3,231           1.06 %       345,247           1,346           0.52 %
Certificates of
deposit                     198,879           1,661           1.12 %       119,011             873           0.98 %
FHLB advances                77,436           1,221           2.11 %        98,306           1,269           1.73 %
Other borrowed funds          3,671              63           2.29 %             -               -           0.00 %
Subordinated
debentures                   20,705             729           4.71 %        15,465             468           4.05 %
Total
interest-bearing            748,911           6,981           1.25 %       607,389           3,999           0.88 %
Noninterest-bearing          97,388                                         60,478
Total liabilities           846,299                                        667,867
Stockholders' equity         77,773                                         72,976
                        $   924,072$   740,843
Net earning balance     $   116,258$    92,942
Earning yield less
costing rate                                                  3.65 %                                         3.23 %
Net interest income,
and net yield spread
on interest earning
assets                                   $   24,732           3.82 %                    $   17,539           3.35 %
Ratio of
interest-earning
assets to
interest-bearing
liabilities                                     116 %                                          115 %





Results of Operations - Comparison of Three and Nine Month Periods Ended September 30, 2018 and 2017




Net income for the three and nine months ended September 30, 2018 was $3,934,242
and $4,947,003, respectively, compared to $1,717,383 and $4,739,197 for the
three and nine months ended September 30, 2017, respectively, which represents
an increase in earnings of $2,216,859 (129%) and $207,806 (4%) for the three and
nine month periods, respectively.



Net Interest Income



Net interest income for the three and nine months ended September 30, 2018
increased $4,677,009 (77%) and $7,193,388 (41%), respectively, when compared to
the same periods in 2017. For the three and nine month periods ended September
30, 2018, the average balance of net interest earning assets over liabilities
increased by approximately $24,567,000 and $23,316,000, respectively, when
compared to the same periods in 2017. For the three and nine month periods ended
September 30, 2018, the net interest margin increased 141 basis points to 4.77%
and 47 basis points to 3.82%, respectively, when compared to the same periods in
2017.



Loan discount accretion and amortization of fair value adjustments for time
deposits and subordinated debentures from the Hometown acquisition resulted in
an additional $2,639,322 and $2,906,154 in net interest income for the three and
nine months ended September 30, 2018, with no comparable amounts during the same
periods in 2017. The loan discount accretion for the three months ended
September 30, 2018 was $2,733,302 of yield accretion, of which $1,766,977 was
recognized upon the unexpected full payoffs of certain PCI loans totaling
$4,302,563 during the quarter ended September 30, 2018. The total loan accretion
income was significantly greater than originally projected during the quarter
due to the accelerated cash flows received from loan principal paydowns and
payoffs overall. Combined, these components of net interest income contributed
123 and 51 basis points to net interest margin for the three and nine months
ended September 30, 2018.

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Interest Income



Total interest income for the three and nine months ended September 30, 2018
increased $5,852,688 (78%) and $10,175,219 (47%), respectively, as compared to
the three and nine months ended September 30, 2017. For the three and nine-month
period ended September 30, 2018 compared to the same periods in 2017, the
average yield on interest earning assets increased 176 basis points to 5.94% and
increased 79 basis points to 4.90%, while the average balance of interest
earning assets increased approximately $179,430,000 for the three-month period
and increased approximately $164,838,000 for the nine-month period. Increased
average interest-earning balances were primarily attributable to the Hometown
acquisition along with organic loan growth when compared to the same periods in
2017. The increase in the average yield on interest-earning assets was primarily
due to loan discount accretion of $2,733,302 and $3,094,114 for the three and
nine months ended September 30, 2018, as discussed above.



Interest Expense



Total interest expense for the three and nine months ended September 30, 2018
increased $1,175,679 (80%) and $2,981,831 (75%), respectively, when compared to
the three and nine months ended September 30, 2017. For the three and nine-month
period ended September 30, 2018 compared to the same periods in 2017, the
average cost of interest bearing liabilities increased 41 basis points to 1.36%
and increased 37 basis points to 1.25%, while the average balance of interest
bearing liabilities increased approximately $154,863,000 for the three-month
period and increased approximately $141,522,000 for the nine-month period.
Increased average interest-bearing balances were primarily attributable to the
deposit and subordinated debenture growth, which was due to the Hometown
acquisition, offset by a decline in average balances of FHLB advances. The
increase in the average cost of interest-bearing liabilities was primarily due
to increased rates on retail deposits and FHLB borrowings which was partially
offset by the deposit and subordinated debentures adjustments, discussed above.



Provision for Loan Losses



Provisions for loan losses are charged or credited to earnings to bring the
total allowance for loan losses to a level considered adequate by the Company to
provide for potential loan losses in the existing loan portfolio. When making
its assessment, the Company considers prior loss experience, volume and type of
lending, local banking trends and impaired and past due loans in the Company's
loan portfolio. In addition, the Company considers general economic conditions
and other factors related to collectability of the Company's loan portfolio.



Based on its internal analysis and methodology, management recorded a provision
for loan losses of $200,000 and $925,000 for the three months and nine months
ended September 30, 2018, respectively, compared to $450,000 and $1,500,000 for
the same periods in 2017.



The Company's decrease in provision was primarily due to the decrease in
construction loan balances to permanent commercial real estate loans which carry
a lower general reserve based on risk. The Bank will continue to monitor its
allowance for loan losses and make future additions based on economic and
regulatory conditions. Management may need to increase the allowance for loan
losses through charges to the provision for loan losses if anticipated growth in
the Bank's loan portfolio continues to increase or other circumstances
warrant.



Although the Bank maintains its allowance for loan losses at a level which it
considers to be sufficient to provide for potential loan losses in its existing
loan portfolio, there can be no assurance that future loan losses will not
exceed internal estimates.  In addition, the amount of the allowance for loan
losses is subject to review by regulatory agencies which can order the
establishment of additional loan loss provisions.



42

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Noninterest Income



Noninterest income decreased $109,111 (7%) for the three months and increased
$567,315 (14%) for the nine months ended September 30, 2018, respectively, when
compared to the three months and nine months ended September 30, 2017. The
decline for three months ended September 30, 2018 is primarily due to the
Company's write-downs of foreclosed assets held for sale, including two
properties acquired from Hometown. The re-measurements and write-downs were due
to a lack of sales activity, further review of surrounding property values and
reductions in the property's listing price (in most cases). Net loss on
foreclosed assets were $459,308 and $338,496 for the three and nine months ended
September 30, 2018 compared to net gains on foreclosed assets of $47,787 and
56,051 for the three and nine months ended September 30, 2017. The Company had
increase in gains on sale of SBA loans of $34,860 and $175,756 for the three and
nine months ended September 30, 2018, respectively, when compared to the same
periods in 2017. Increases in service charges of $164,418 and $475,563 for the
three and nine months ended September 30, 2018 were attributable primarily to
the April 2018 Hometown acquisition.



Noninterest Expense



Noninterest expenses increased $1,654,017 (33%) and $8,364,973 (60%) for the
three and nine months ended September 30, 2018 when compared to the same periods
in 2017. The increase is due to a few significant factors.



Due to the Company's acquisition of Hometown, $150,877 and $3,570,927 of
one-time, nonrecurring merger costs were incurred for the three and nine months
ended September 30, 2018. The costs relate to legal, accounting and investment
advisory fees, as well as the cost incurred for termination of a specific vendor
core processing contract of approximately $2 million.



Salaries and employee benefits increased $835,165 (27%) and $2,317,911 (26%) for
the three and nine months ended September 30, 2018 when compared to the same
periods in 2017. The increase is primarily due to the Company's existing
expansion in the Joplin, Missouri market (pre-acquisition) and the Hometown
acquisition which contributed approximately $521,000 and $1,390,000 of
additional expense for the three and nine months ended September 30,2018.



Occupancy expenses increased $520,741 (88%) and $1,357,430 (87%) for the three
and nine months ended September 30, 2018 when compared to the same periods in
2017. Lease expense on the new headquarters facility began in January 2018 and
total expense was approximately $155,000 and $465,000 for the three and nine
months ended September 30, 2018. The remaining increases relate to depreciation
on furniture and fixtures for the new facility and the newly acquired assets
from the Hometown acquisition.



Data processing expenses increased $60,184 (22%) and $365,324 (50%) for the
three and nine months ended September 30, 2018 when compared to the same periods
in 2017. The increase is primarily due to increased technology investments for
the new headquarters facility and additional core processing expense associated
with the Hometown acquisition.



Amortization expense of the core deposit intangible from the Hometown acquisition was $94,286 and $314,286 for the three and nine months ended September 30, 2018. There was no amortization expense for the same periods in 2017.




Provision for Income Taxes



The provision for income taxes increased by $947,022 (213%) and decreased by
$237,076 (16%) for the three and nine months ended September 30, 2018 when
compared to the same periods of 2017. The decrease in the provision for income
taxes is primarily due to the increased utilization of tax credits and the
decline in federal tax rates as a result of the Tax Cuts and Jobs Act signed
into law on December 22, 2017, and the three month increase was due to the
significantly higher income in 2018.



43

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Nonperforming Assets



The allowance for loan losses is calculated based upon an evaluation of
pertinent factors underlying the various types and quality of the Bank's
existing loan portfolio.  When making such evaluation, management considers such
factors as the repayment status of loans, the estimated net realizable value of
the underlying collateral, borrowers' intent (to the extent known by the Bank)
and ability to repay the loan, local economic conditions and the Bank's
historical loss ratios.  The allowance for loan losses, as a percentage of
nonperforming loans outstanding, as of September 30, 2018 and December 31, 2017
was 55.3% and 71.3%, respectively.  Total loans classified as substandard,
doubtful or loss as of September 30, 2018, were $25,823,000 or 2.67% of total
assets as compared to $14,134,000 or 1.78% of total assets at December 31,
2017.  The Company downgraded to substandard one multi-family real estate loan
for approximately $6.0 million during the three months ending September 30,
2018.  In addition, acquired loans from Hometown made up $4.1 million of loans
classified as substandard at September 30, 2018.  Management considered
nonperforming and total classified loans in evaluating the adequacy of the
Bank's allowance for loan losses.



The ratio of nonperforming assets to total assets is another useful tool in
evaluating exposure to credit risk. Nonperforming assets of the Bank are
comprised of nonperforming loans (including troubled debt restructurings) and
assets which have been acquired as a result of foreclosure or deed-in-lieu of
foreclosure. All dollar amounts are in thousands.



                                                9/30/2018        12/31/2017       12/31/2016
Nonperforming loans                            $     13,984$      9,962$      8,632
Real estate acquired in settlement of loans           1,133              283            2,682
Total nonperforming assets                     $     15,117     $     

10,245 $ 11,314


Total nonperforming assets as a percentage
of total assets                                        1.56 %           1.29 %           1.64 %
Allowance for loan losses                      $      7,732$      7,107$      5,742
Allowance for loan losses as a percentage of
gross loans                                            0.98 %           1.12 %           1.05 %



Included in the table above is $4.1 million of nonperforming loans acquired from Hometown and $863,603 in real estate acquired in settlement of loans.

Liquidity and Capital Resources




Liquidity refers to the ability to manage future cash flows to meet the needs of
depositors and borrowers and fund operations. Maintaining appropriate levels of
liquidity allows the Company to have sufficient funds available for customer
demand for loans, withdrawal of deposit balances and maturities of deposits and
other liabilities. The Company's primary sources of liquidity include cash and
cash equivalents, customer deposits and Federal Home Loan Bank of Des Moines
borrowings. The Company also has established borrowing lines available from the
Federal Reserve Bank which is considered a secondary source of funds.



The Company's most liquid assets are cash and cash equivalents, which are cash
on hand, amounts due from financial institutions, and certificates of deposit
with other financial institutions that have an original maturity of three months
or less. The levels of such assets are dependent on the Bank's operating,
financing, and investment activities at any given time. The Company's cash and
cash equivalents totaled $31,211,790 as of September 30, 2018 and $37,406,930 as
of December 31, 2017, representing a decrease of $6,195,140. The variations in
levels of cash and cash equivalents are influenced by many factors but primarily
loan originations and payments, deposit flows and anticipated future deposit
flows, which are subject to, and influenced by, many factors.



In July 2013, the Board of Governors of the Federal Reserve Board and the FDIC
approved the final rules implementing the Basel Committee on Banking
Supervision's capital guidelines for U.S. banks (commonly known as Basel III).
Under the final rules, which began for the Bank on January 1, 2015 and are
subject to a phase-in period through January 1, 2019, minimum requirements will
increase for both the quantity and quality of capital held by the Bank. The
rules include a new common equity Tier 1 capital to risk-weighted assets ratio
(CET1 ratio) of 4.5% and a capital conservation buffer of 2.5% of risk-weighted
assets, which when fully phased-in, effectively results in a minimum CET1 ratio
of 7.0%. Basel III raises the minimum ratio of Tier 1 capital to risk-weighted
assets from 4.0% to 6.0% (which, with the capital conservation buffer,
effectively results in a minimum Tier 1 capital ratio of 8.5% when fully
phased-in), effectively resulting in a minimum total capital to risk-weighted
assets ratio of 10.5% (with the capital conservation buffer fully phased-in),
and requires a minimum leverage ratio of 4.0%. Basel III also makes changes to
risk weights for certain assets and off-balance-sheet exposures. We expect that
the capital ratios for the Bank under Basel III will continue to exceed the well
capitalized minimum capital requirements, when fully phased in.



44

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The Bank's capital ratios are above the levels required to be considered a
well-capitalized financial institution. As of September 30, 2018, the Bank's
common equity Tier 1 ratio was 10.94%, the Bank's Tier 1 leverage ratio was
10.17%, its Tier 1 risk-based capital ratio was 10.94% and the Bank's total
risk-based capital ratio was 11.81% - all exceeding the minimums of 6.5%, 5.0%,
8.0% and 10.0%, respectively, as of September 30, 2018.

© Edgar Online, source Glimpses

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09/28Guaranty Federal Bancshares, Inc. Announces Quarterly Dividend
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08/09GUARANTY FEDERAL BANCSHARES : Management's Discussion and Analysis of Financial ..
AQ
07/19GUARANTY FEDERAL BANCSHARES INC : Results of Operations and Financial Condition,..
AQ
07/19Guaranty Federal Bancshares, Inc. Announces Preliminary Second Quarter 2018 F..
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07/06GUARANTY FEDERAL BANCSHARES, INC. : Ex-dividend day for
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